Finance guru Alan Kohler has declared Australian property is now a ‘bad investment’ and called for people to stop using house ownership as a wealth-building tool.

Speaking on the Equity Mates podcast, the ABC star said he had become more optimistic about housing affordability for the first time since 2024.

Kohler said the market is turning due to Labor’s recently announced changes to capital gains tax (CGT) concessions and negative gearing. 

He also pointed to increased housing construction, easing immigration and higher interest rates.

‘I do think property is a bad investment now – real estate,’ Kohler told hosts Alec Renehan and Bryce Leske.

‘This is really what we’re talking about when we talk about housing becoming more affordable: we’re talking about it becoming a bad investment.

‘Housing has to stop being the way that people build wealth and just become a place to live. 

‘That’s what needs to happen and I think now, for the first time, that’s probably going to happen.’

Alan Kohler (pictured) welcomed the changes in the Albanese government’s May budget 

During the podcast, Kohler welcomed the Albanese government’s changes but argued they would not be enough to solve Australia’s housing crisis on their own. 

‘I approve of the changes in the Budget that were announced. I think they’re a good start,’ he said.

In May, the government limited negative gearing for new builds and removed the CGT discount of 50 per cent, replacing it with a flat 30 per cent tax indexed to inflation.

The two changes were among a number Kohler proposed in his Quarterly Essay. 

‘I do think those things are good symbolic changes. They’re not going to make that much difference,’ he said. 

‘They’re worth doing, but really what has to happen is a lot more houses get built.’

Kohler predicted house prices would fall during the remainder of the year, arguing the conditions that fuelled Australia’s long-running property boom had largely disappeared.

‘They’re already falling in Melbourne and Sydney. The national average in May was flat and I think for the rest of the year we’re going to see house prices fall across the country,’ he said.

Kohler said housing was now a ‘bad investment’ in Australia, following price falls (file image) 

‘For the first time, I’ve got to the point of view that we’re probably going to see house prices stay where they are for a long time now.’

According to Cotality data, Australia’s largest housing markets recorded declines in July, led by Sydney, where dwelling values fell 1.4 per cent over the month.

Melbourne followed with a 1.2 per cent drop, while Brisbane and Adelaide, which had been among the country’s strongest-performing markets, posted declines of 0.6 per cent and 0.2 per cent respectively. 

Perth was the only major capital to avoid a fall, with dwelling values edging up 0.1 per cent. 

Kohler said a combination of factors is likely to keep a downward pressure on prices.

‘I think the days of super-low interest rates that caused house prices to really surge over the past 10 years or so are over,’ he said.

‘Interest rates are now 4.35 per cent. They won’t rise again, I don’t think, but I don’t think they’re going to come down much, if at all.’

Despite his optimism, Kohler conceded Australia faces a significant challenge to increase housing supply and deliver on the National Housing Accord’s target of 1.2 million new homes by 2029. 

Fresh Australian Bureau of Statistics data released this week underscores the size of the task.

In June, just 18,328 homes were approved nationwide, slightly fewer than the 18,375 approvals in June 2016, despite a sharp rise in population over the past decade.